Types of commercial real estate

Commercial Property vs. Residential Property: What sets them apart?

Here are the differences between residential and commercial real estate:

  • Purpose: Commercial real estate spaces are built specifically to generate income for the investor. Though owners of a single-family residence can lease their home to generate income.
  • Occupancy: Large apartment buildings and high-rise residential buildings with various units are considered commercial buildings classified as multi-family properties. 
  • Lease length: Commercial real estate leases are typically for multiple years. They generally are longer than residential leases, most of which are annual leases.
  • Rates: Commercial real estate prices are typically reported as a valuation calculated by the valuation of the square footage of a property. Residential real estate properties are typically priced as the annual sum of monthly rent.

Types of commercial real estate

Commercial real estate is a large category that covers many different types of commercial buildings. It can be divided into five subcategories.

Office space

Offices include buildings with workspaces that are available for rent for different businesses to operate out of. Office rentals can rely on leasing a single-room office or an entire floor/building for a larger business. 

Retail

Retail properties are any buildings used for retail purposes. This includes traditional malls and shopping centers, which contain multiple retail tenants, as well as restaurants. 

Warehouse/Industrial

This type of commercial property includes warehouses, distribution centers, facilities, and flex spaces that can mix industrial space with office space.

Hospitality/Tourism

Real estate in the tourism sector can be divided into different categories. Full-service hotels are large, multi-room hotels with at least one bar or restaurant, boutique style hotels, and vacation rentals such as Airbnb properties. 

Apartment Complexes

An apartment complex is a building that contains self-contained units occupied by different tenants.